Elizabeth Warren on Budget & Economy

Banking lobbyists fought me on bank consumer protection

[In Jan. 2010, in exchange for passing an overall financial package, it appeared that] there might be some face-saving attempt to set up a new consumer protection department somewhere else in the government, but there would be no strong, independent
agency with the authority to get much done.

The death wouldn't be a public execution. Instead, the Senate Banking Committee would propose a financial reform bill with no consumer agency. No one would ever know exactly who had killed it, or why.

I tried everything. I wrote an Op-Ed for the Wall Street Journal. I showed up [on TV shows]. To me, the issue was simple: Banks versus families. And the request was reasonable: A public vote. The lobbyists bore down. Plan A: Kill the agency. Plan B: Maim
it so it won't interfere with the big banks' business plans.

Martha Coakley and I wrote an op-ed piece in the New Republic, strongly advocating for a new agency. [The article was entitled, "The Right Way to Regulate", New Republic, November 18, 2009.

Bankruptcy is due to job loss or divorce, not deadbeats

[In bankruptcy court in the 1980s], The people seeking the judge's decree were once solidly middle-class. They had gone to college, found good jobs, gotten married, and bought homes.

All around the country, the overwhelming majority of people filing
for bankruptcy were regular families who had hit hard times. Nearly 90% were declaring bankruptcy for 1 of 3 reasons: a job loss, a medical problem, or a family breakup (typically divorce, sometimes the death of a husband or wife).
By the time these families arrived in the bankruptcy court, they had pretty much run out of options.

Worse yet, the number of bankruptcy families was climbing. In the early 1980s, Banks complained loudly about unpaid credit card bills.
The word "deadbeat" got tossed around a lot. It seemed that people filing for bankruptcy weren't just financial failures--they had also committed an unforgivable sin.

2005 bankruptcy law: great for companies & bad for families

The changes to the bankruptcy law went into effect in 2005. That year, more than 2 million families raced to the bankruptcy courthouse, afraid they would lose their last, best chance at protection. Sure enough, the minute the amendments to the law kicked
in, bankruptcy filings dropped sharply. And the credit industry got what it wanted--less help for families in trouble.

No single change made the difference. Instead, it was death by a thousand cuts. The law got more complicated. The paperwork
multiplied. Single mothers got less help, and they had a harder time collecting past due child support. Filing fees went up. Some people were still eligible for relief, some people weren't. Some debts could be discharged, some could not. There were
hundreds of changes, some big and some small, but every change tilted in the same direction: Squeeze the families in trouble and increase the profits for big banks, credit card companies, car lenders, and a slew of other very successful businesses.

Everyone hated "Too Big To Fail" except bankers who benefit

A financial company that was truly gigantic and owed lots of money to lots of other big companies would be so important to the economy as a whole that the government would not let it fail. Throw in a few billion dollars of FDIC-insured checking accounts,
and the government would always make sure that this megabank stayed in business.

By the time TARP came along, pretty much everyone had grown to hate TBTF [Too Big To Fail]--except for the bankers who benefited.
TBTF allows the megabanks to operate like drunks on a wild weekend in Vegas. They can take any kind of crazy risk--put $1 billion on black 22!--and if the bet pays off, the CEOs and the shareholders will be richer than kings.
If it doesn't pay off and the bank is wiped out, the taxpayers will foot the bill. A no-strings-attached bailout created a Too Big to Fail monster, and I was pretty sure we'd be paying for that mistake for a long time.

Make bank complaint hotline public, to force self-policing

I figured we could be stupid for a while. "Uh-huh. And what will we do with the complaints?"

"Uh,
take them."

"And then what?" We eventually got to the key point: A lot of government agencies collect complaints from consumers, but to those who complained, the process often seems like a dead end. Nothing seems to happen.

Surely there had to be a
better way. To begin with, a 21st century agency could use new technologies to take complaints online, tag them electronically, email them to the appropriate bank--and then track what happened.

And what if we also made the complaint data PUBLIC? The
big banks would HATE this. It would be their worst nightmare come to life: we'd be taking their dirty laundry and airing it in public. The bank lobbyists got more hostile. There was even talk of a lawsuit if we went ahead. But we went ahead anyway.

How we spend federal money is about choices

Someone had asked me how we were going to tackle the deficit, and in my response I got a little wound up. We hear about the deficit as if it's a monster and America's only choice is to slash and burn huge swaths of our budget immediately or face total
destruction. All or nothing, live or die.

Yes, the deficit is a problem, and it deserves serious attention, but I don't buy that there's only one way out. I think we have to face a more fundamental issue first:
How we spend our government's money is about values, and it's about choices. We could cut back on what we spend on seniors and kids and education, as the Republicans in Congress insisted we should. Or we could get rid of tax loopholes and ask
the wealthy and big corporations to pay a little more and keep investing in our future. How we spend our money isn't some absurdly complicated math problem. It's about choices.

Financial crisis due to deregulation, not boom-bust cycle

In a Wall Street Journal op-ed, I'd quoted his remark that a financial crisis every 5 to 7 years was inevitable and given my own blunt assessment: He was wrong. The real cause of the crash was not some inevitable cycle; this crash was the direct
consequence of years of deliberate deregulation and the resulting dangerous actions of the big banks. I'd repeated this view multiple times, saying we needed a cop on the beat to make sure that a crash didn't happen again.

Source: A Fighting Chance, by Elizabeth Warren, p.177
, Apr 22, 2014

Balanced approach to deficit reduction

Warren said she favored a "balanced approach" to deficit reduction--one of President Obama's favorite euphemisms for tax increases. Brown sought to depict Warren as a tax-increaser, and he deflected her attacks, saying: "Her criticism of me is that
I'm not gonna raise taxes, and that's an accurate criticism." He said of Professor Warren, "she's obsessed with raising taxes. The first thing, every single time, is to raise taxes."

Deregulation has created Wild West conditions at banks

She crisscrossed the country, spreading the word about the Consumer Financial Protection Bureau. She spoke about her belief in free markets & in government regulation as a mechanism that protected free enterprise by ensuring that the markets functioned
fairly and honestly.

In those speeches she would outline the impact on middle-class Americans of rising health-care costs, burgeoning debt, and the depletion of not only their savings but also, with the rise in joblessness, their confidence.
She spoke of "the Wild West" conditions deregulation had created, where banks could sell virtually any product they wanted, on any terms: mortgages they knew consumers could not pay off, credit cards whose rates they could raise at whim.
Her final remarks: "We cannot run our country without a strong middle class. We cannot run a democracy without a strong middle class," she said, her voice quavering slightly. "If we hollow out the middle class, then the country we know is gone."

Increased financial transparency and accountability

Markets work. Capitalism works with a set of rules. We can make the system work with regulation. I'm not somebody who believes it's time to throw the whole thing out. But regulation has got to support it.
And the way it supports it, is it increases transparency in this system, it increases honesty in the system. It increases accountability in the system. When you get those things there's plenty of room to make profits. There's plenty of room to be rich,
I'm all for that. But it's got to be profits that were made honestly. It's got to be profits made from bringing something new and valuable to the marketplace not just figuring out the newest trend.
You know I hate to say it but something like regulatory reform sounds so boring that I may fall asleep when I say it.

Harsher rules on credit agencies

The rules are the same. Nothing has changed. The laws have not changed.
They continue to run their credit rating agencies in the way they believe will best enhance their own profits and revenues. You have to change the rules of the road.

Christian Coalition publishes a number of special voter educational materials including the Christian Coalition Voter Guides, which provide voters with critical information about where candidates stand on important faith and family issues.
The Christian Coalition Voters Guide summarizes candidate stances on the following topic: "Passage of a Balanced Budget Amendment to the U.S. Constitution"